FY 2012 Budget Resolution Action Begins, Calls for Pell Cuts and Reform

Last week, while appropriators tried to find agreement on an FY11 spending plan and prevent a government shutdown, House Budget Committee Chairman Paul Ryan (R-WI) released his proposed budget resolution for FY12. The House this week intends to bring the FY12 budget resolution to the floor for a vote. The resolution passed the House Budget Committee on Wednesday, April 6, by a party-line 22-16 vote.

The budget resolution, which is different from appropriations legislation, is an annual guide for congressional spending and fiscal policy, but is not signed into law by the president. Lawmakers will use the budget resolution to set the ceiling for discretionary spending in a given fiscal year. Typically, after Congress approves the measure, using the framework of the budget resolution, the House and Senate appropriations committees will allocate funding among their respective subcommittees and begin marking up FY11 appropriations bills.

However, the Senate has yet to draft its version of the legislation, and given the political gridlock we are already witnessing in the 112th Congress, it is very unlikely that the House and Senate will be able to reach agreement on an FY12 budget resolution this year. There was no agreement last year. Senate budget writers were able to pass an FY11 budget resolution in committee, but were never able to bring it to the Senate floor for a vote. The issue became moot because Congress has been funding the federal government on continuing resolutions based on FY10 funding levels.

The FY12 House plan, “The Path to Prosperity: Restoring America’s Promise”, contains not only spending and tax reform proposals but also policy recommendations, as the budget resolution is often seen as a statement of values. This plan is no exception, calling not just for billions, but trillions of dollars in federal spending cuts, and was met with both outrage and laughter by some liberal economists and policymakers. Chairman Ryan supported his proposal with an opinion piece in the Wall Street Journal.

Ryan’s budget proposal would cut federal spending by $6 trillion over the next ten years and freeze non-security discretionary spending at FY08 levels for five years. Other goals include:

• Establishing a binding cap on total spending as a percentage of gross domestic product
  Continuing the earmark ban;
• Reducing the federal workforce by 10 percent and freeze federal pay through 2015;
• Converting the federal share of Medicaid spending into a block grant to states indexed for inflation and population growth;
• Consolidating the current six income tax brackets and cut the top individual rate to 25 percent from 35 percent.

Pell Grant Program Singled Out in Budget Resolution

In addition to calling for a repeal of the recently enacted health care reform legislation and sweeping Medicare reforms, the House budget resolution also proposes significant changes to the Pell grant program and purports that, “increases in Pell grants appear to be matched nearly one for one by increases in tuition at private universities.” The plan seeks to, “return Pell grants to their pre-stimulus levels to curb rising tuition inflation and make sure aid is targeted to the truly needy.”

In a news release last week, the Student Aid Alliance, of which NACUBO is a member, stated, “The Fiscal Year (FY) 2012 budget proposal released by the House Budget Committee today takes aim at the more than 9 million students who rely on Pell Grants to go to college. Regardless of whether the proposal to slash funding to its 2008 level targets the maximum grant or funding for the entire program, the result would be a devastating blow to financially challenged students and families.”

For further reading on the budget resolution and its impact on higher education, as well as links to additional materials, see:

House Republican 2012 Budget Plan Would Slash Student Aid; Fate of 2011 Budget Still Unclear ACE, Wednesday, April 6, 2011